IRA contributions after age 70½

You can’t make regular contributions to a traditional IRA in the year you reach 70½ and older. However, you can still contribute to a Roth IRA and make rollover contributions to a Roth or traditional IRA regardless of your age.

Spousal IRAs

If you file a joint return, you may be able to contribute to an IRA even if you did not have taxable compensation as long as your spouse did. The amount of your combined contributions can’t be more than the taxable compensation reported on your joint return. See the formula in IRS Publication 590-A.

Can I contribute to an IRA if I participate in a retirement plan at work?

You can contribute to a traditional or Roth IRA whether or not you participate in another retirement plan through your employer or business. However, you might not be able to deduct all of your traditional IRA contributions if you or your spouse participates in another retirement plan at work. Roth IRA contributions might be limited if your income exceeds a certain level.

Examples

Danny, an unmarried college student working part-time, earns $3,500 in 2014. Danny can contribute $3,500, the amount of his compensation, to his IRA for 2014. Danny’s grandmother can make the contribution on his behalf.

John, 42, has both a traditional IRA and a Roth IRA and can only contribute a total of $5,500 to either one or both in 2014.

Sarah, age 52, is married with no taxable compensation for 2014. She and her husband reported taxable compensation of $60,000 on their 2014 joint return. Sarah may contribute $6,500 to her IRA for 2014 ($5,500 plus an additional $1,000 contribution for age 50 and over).

Tax on excess IRA contributions

An excess IRA contribution occurs if you:

Contribute more than the contribution limit.

Make a regular IRA contribution to a traditional IRA at age 70½ or older.

Make an improper rollover contribution to an IRA.

Excess contributions are taxed at 6% per year as long as the excess amounts remain in the IRA. The tax can’t be more than 6% of the combined value of all your IRAs as of the end of the tax year.

To avoid the excess contributions tax:

withdraw the excess contributions from your IRA by the due date of your individual income tax return (including extensions); and

withdraw any income earned on the excess contribution.

See Pub 590-A for certain conditions that may allow you to avoid including withdrawals of excess contributions in your gross income.